Bakken Natural Gas Pipeline To Minnesota - WBI Energy

Bakken Natural Gas Pipeline to Minnesota - WBI Energy

MDU Resources' WBI Energy plans to build a $650-700 million, 400-mile pipeline from the Bakken to markets in eastern North Dakota, Minnesota, and Wisconsin.

The pipeline will stretch from western North Dakota to western Minnesota and will tie into Viking Gas Transmission's pipeline system. The Viking system will allow gas to move into markets in Wisconsin.

“It`s exciting to think that the proposed pipeline could provide a new transportation route to bring Bakken-produced natural gas directly to industrial customers and commercial and residential utility customers in eastern North Dakota,” said David L. Goodin, CEO of MDU Resources. “Through interconnecting pipelines, the proposed pipeline could also serve Minnesota, Wisconsin and Midwest U.S. markets.”

Planned capacity is 400 mmcfd, but it could be expanded to 500 mmcfd if user commitments warrant the change. The pipeline will include 400 miles of 24-inch pipe, at an estimated construction cost of $650-700 million.

Steven L. Bietz, president and CEO of WBI Energy. "This project would be the largest single pipeline construction project in our company history. This project, combined with other recent and ongoing projects, would bring our total Bakken-related investment to nearly $1 billion."

An open season for the pipeline will start late this summer and construction is expected to start in early 2016.

Bakken Producing Sour Gas? H2S Problem In North Dakota

H2S Warning Sign

Is the Bakken producing higher volumes of H2S? That's the question you have to ask yourself when you see pipelines implementing H2S standards for the first time. On May 8, Enbridge submitted an emergency application to the Federal Energy Regulation Commission (FERC) asking to amend its conditions of carriage to 5 ppm of H2S or less. If accepted, Enbridge would have the right to reject crude with higher levels of H2S.

H2S limits that have been implemented this year include:

• Tesoro's High Plains Pipeline - 5 ppm since January 1
• Bridger & Bella Fourche Pipelines - 10 ppm since April 1

When those limits went into place, it seems as if producers with high H2S concentrations might have shifted production to the Enbridge system.

Enbridge acted after it found concentrations of 1,200 ppm in a crude tank at its Berthold Terminal. 20 ppm is the limit allowed by OHSA and an average of 10 ppm of exposure is all that is allowed over an 8-hour work day.

Both Plains Marketing and Murex Petroleum objected to the FERC application, but it looks as if they solved their differences when Enbridge notified FERC it wasn't planning an outright ban on crude with higher H2S concentrations. The two companies weren't against the change, but were afraid they couldn't comply in the time frame planned.

You can read more about the topic in an article at reuters.com

Bakken Oil Moving Back To Pipelines As Differentials Narrow

Bakken Pipeline Map

Our friends at RBN Energy published an article this morning that notes pipeline flows have increased in May.

The increase in volume is likely the direct result of more narrow differentials on the East and West Coasts.

Enbridge's North Dakota pipeline system has been moving almost 50,000 b/d more than it has for most of the year.

Louisiana Light Sweet and Brent crude are both trading at premiums of less than $10 to WTI. That's after trading at premiums of ~$15 or more earlier in the year. Losing the differential means less can be gained by railing to areas not connected to pipelines.

Read the full article at rbnenergy.com

Paradigm Midstream Planning Bakken Pipeline In Dunn & McKenzie Counties

Enbridge Bakken System Map

Paradigm Midstream is planning a 70-mile, 12-inch pipeline that will move as much as 120,000 b/d out of McKenzie and Dunn counties to various receipt points.

“Logistical constraints and capacity issues associated with transporting crude and NGLs have long been a detriment to pricing for producers throughout the region,” said Brian Manion , Paradigm Midstream Founder. “The Paradigm Midstream pipeline connects the two most prolific areas of the Bakken and offers the most optionality of any outbound infrastructure to date.”

The pipeline will provide the following connections:

• Canadian Pacific Rail through the Pioneer Rail Facility in New Town
• BNSF Rail through Enbridge's Berthold Rail Facility
• Pipeline interconnects with Enbridge's Bakken System

The proposed pipeline uniquely provides producers with access to East Coast, West Coast and Gulf Coast rail markets, as well as multiple pipeline and refinery markets at Clearbrook, the Upper Great Lakes, Cushing, the Midwest and the Gulf Coast.

Construction is set to start at the end of 2013 and the pipeline will be in service in 2014.

Dakota Plains and Paradigm Midstream area also pursuing a new NGL transloading solution at the Pioneer facility.

Read the full press release at prnewswire.com

Rail Is Here To Stay In The Bakken - Bentek

Bakken Crude Rail Costs

Moving crude oil by rail is here to stay for the foreseeable future. That was the message delivered multiple times at Bentek's annual Benposium conference in Houston.

Wide spreads in WTI and waterborne oil prices have made rail receipts attractive on the East and West Coasts. Once oil is committed to rail, it's there to stay.

"When barrels are committed to rail terminals, rail wins" state Rusty Braziel of RBN Energy at Bentek's Benposium conference.

Well, at least for some period oil will utilize rail. Many rail terminals have very short paybacks that make developing the facilities attractive even if they are only utilized for 1-2 years.

Over 50% of the crude oil produced from the Bakken is being moved by rail and all indications point to that being the case for some time. Prices are better at rail delivery points. The Gulf Coast is seeing growing production from the Eagle Ford and Permian, which only puts more pressure on prices to the South.

“Over time oil will begin moving back onto pipes, but its going to be a fight. Pipelines will always be the most efficient way to move crude, but they’ll have to be competitive on pricing and be able to deliver crude into competitive markets. ”

It's not surprising, but Bentek also noted that Bakken production has grown twice as fast as anyone thought in 2011. Current production is approximately what analyst were predicting for 2016. The play is just three years ahead of schedule!

Bentek's Benposium conference is held in Houston each Spring.